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Bitcoin Seminar

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maithili mishra

on 16 May 2013

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Transcript of Bitcoin Seminar

The negatives of the Bitcoin economy: Bitcoin Characteristics: What sets it Apart? Extremely high speed and low transaction costs, especially across international borders
No central authority
Instantly available
Secure
Relatively anonymous
Can't be counterfeited
Transactions are non-reversible
No account blocking or freezing
A precise, known amount of inflation What is a Bitcoin? Bitcoin is an Internet currency first established in 2009.
It is anonymous and completely decentralized.
Its existence relies upon peer-to-peer networking and a dedicated base of online ‘miners’. Excessive deflation and hoarding? Robert wants to send Zim bitcoins. Lack of Government Control Mining your own business since 2009! Bitcoin! What could possibly be wrong with this currency? Excessive deflation & hoarding Illegal Usage Negative externalities due
to lack of government regulation Extremely Volatile Goods produced faster than Money supply =DEFLATION ( Price level of goods & Value of Bitcoin ) HOARDING ? Rewards savers of money & Punishes borrowers
Societies become wealthy by producing more than they consume
Diminishes concentration and consolidation of power in the hands of the federal government
Encourages people to produce more to acquire more of the highly valued currency
People hoarding/saving money reduces interest rates and in turn increases incentives to invest in long term projects Bad business decisions such as production and use of pesticides, harmful drugs, etc.
Certain goods and services like public schools and roadways might be ignored
Free markets may have a tendency to favor the rich
Illegal black market may flourish
Will the economy spiral out of control? Look at our current Fiscal Stimulus Package
Debt
Increased Taxes
Decrease in value of the Dollar
Decreased foreign investment
Lower productivity overall
Reduced future economic growth Bitcoin Transaction Bitcoin Wallets Robert & Zim have bitcoin wallets A file that stores bitcoin addresses Bitcoin address 31uEbMgunupShBVTewXjtqbBv5MndwfXhb "Email address" with a bitcoin balance
Anyone can generate an address Robert has a bitcoin address in Bitcoin-Qt for the amount he wants to send. Address breakdown Cryptographic Key Pair Public Key Private Key Entire network privy Kept secret in Robert's wallet Example 10 bitcoins exist as an address: 1CC3X2gu58d6wXUWMffpuzN9JAfTUWu4Kj Robert knows the private key: 5Kb8kLf9zgWQnogidDA76MzPL6TsZZY36hWXMssSzNydYXYB9KF He can "unlock" the address + spend the bitcoins Transaction Address + private key Signed by Bitcoin client Transaction request pushed to network Validation Nothing is valid yet

Transactions are only real if the network approves them Network validation makes each bitcoin have value Verifying Transactions "The network" An unorganized worldwide network of Bitcoin miners (computers solving cryptographic hash functions)
Mining is incentivized Verification Process 1) Miner collects many transactions in a block 2) Block converted to large string (the block's hash value) 3) [Hash + Nonce] run through Hashcash 4) Output must have fixed # of 0's, otherwise step 3 occurs again 5) Solved block demonstrates 'proof of work' by network 6) Solved block sent out to the network. Network Verification Each hash combines previous transaction blocks Near impossible to inject malicious blocks etc. Network Longevity 50 Bitcoins released for each block solved 50 Bitcoins ~ $6,350 "Proof of work" difficulty is elastic
Factors in computers increasing in speed INTRODUCTION CONCLUSION Bitcoin seems to be a promising change in the internet currency world.
As it offers a lot more convenience and modernity it also carries along with it the fear of misuse. Better and more stringent measures are set to come to suppress the negative aspects of this crypto-currency and it is set to make a revolution in which people transact! References Thank you By:
Maithili Mishra
Sonakshi Saxena CONTENTS Introduction
What sets bitcoin apart?
The negatives of bitcoin
Excessive hoarding and inflation?
Lack of government control
Bitcoin Transation process
Bitcoin Verification process
Network longetivity
Full transcript